Contracts, Agency, and Seller/Buyer Relationships
Contracts, Agency, and Seller/Buyer Relationships
This domain tests formation and performance of auction contracts, the agency relationship, and the rights of sellers and buyers. Know the difference between reserve and absolute sales, how terms become part of the contract, and when a seller or auctioneer may withdraw.
Core rules
- Use a written listing or consignment contract that identifies the parties, property, commission, buyer’s premium, sale date, reserve or absolute status, expenses, and settlement terms. Ambiguity is construed against the drafter in many disputes.
- Agency authority matters: the auctioneer may bind the seller only within actual or apparent authority. Exclusive-right-to-sell, exclusive-agency, and open listings create different commission outcomes.
- For goods, Indiana’s UCC auction rule (UCC 2-328) makes a sale with reserve unless the goods are explicitly put up “without reserve.” In a without-reserve sale, the seller cannot bid, and the auctioneer cannot withdraw after the item is put up unless no bid is made within a reasonable time.
- Real-property auctions are governed by the contract and real-estate law; do not import goods rules blindly. Disclose reserve, seller bidding, buyer’s premium, and conditions before bidding.
Worked example
An auctioneer advertises a tractor “without reserve,” then refuses the high bid because it is below the seller’s target. Under UCC 2-328, once the tractor is put up without reserve, it must be sold to the highest bidder; the seller may not bid, and the auctioneer may not withdraw merely because the price disappoints. The seller’s remedy is to have set a reserve in the contract.
Traps
Assuming every auction is absolute; confusing a reserve amount with an opening bid; letting a seller bid in an absolute sale; and relying on oral terms that contradict the written conditions.